Employer Compliance With New Jersey’s Diane B. Allen Equal Pay Act

In April 2018, the New Jersey Legislature passed the Diane B. Allen Equal Pay Act, which Governor Phil Murphy then immediately signed. New Jersey is the strongest equal pay law in the nation. Our employment lawyers help businesses comply with all their wage and hour requirements, including equal pay compliance. We also defend employers against claims of wage, hour and equal pay violations.

The most important thing for employers to know, is what the Equal Pay Act does. The following is a brief overview.

Basic Provisions

The Equal Pay Act amends New Jersey’s Law Against Discrimination (“the LAD”) to make it an unlawful employment practice for employers to discriminate in wages, benefits, or other compensation because of a characteristic of the employee which the LAD protects – and the LAD prohibits retaliation because of almost any personal characteristic which an employee cannot change; This includes gender, race, religion, age, sexual orientation, gender identity, HIV related illnesses, domestic partnership or civil union status, atypical hereditary cellular or blood trait, genetic information, family status, and the employee’s liability for military service.

More specifically, employers cannot pay employees in a protected class (ie., race, religion, gender, etc.) at a rate less than others not in the protected class for “substantially similar” work, considering factors such as skill, effort and responsibilities. If employers are in violation of this provision they must raise the pay rates of the employees in the protected class; they cannot comply by reducing the compensation of the other employees.

Exceptions

Exceptions do exist in the Equal Pay Act. However, the burden is on the employer to prove that it meets the requirements of these exceptions. These are the exceptions.

• The difference is required by a bona fide seniority or merit system.
• A disparity which is based on legitimate factors other than the protected classification. Such legitimate, bona fide factors include training, education, experience, and the “quantity or quality of production.”

The employer in these cases must prove that the disparity is not based on a prohibited classification and does not perpetuate a discriminatory pay disparity. They must also prove that the factors are applied reasonably, and that the non-discriminatory factors are the sole reason for the disparity. The employer must also prove that the disparity is based on a legitimate, non-discriminatory business necessity, and that there were no other alternatives that would have met the necessity without the pay disparity, or with a lesser disparity.

Statute of Limitations Extended

Discrimination lawsuits have long had a two year statute of limitations. However, the Equal Pay Act extends the statute of limitations for unequal pay violations to six years. It also allows claims to go back beyond six years if the unequal pay constitutes a “continuing violation.” Employers cannot require employees to agree to a shortened limitation period.

Retaliation and Other Practices Prohibited

Employers cannot retaliate against employees for objecting to what they reasonably believe are equal pay violations, seeking legal advice, sharing information with an attorney, filing a complaint, or testifying about discrimination or unequal pay. Employers also cannot prohibit employees from seeking legal advice, or discussing compensation, job titles, occupational categories or benefits, or retaliate against them for doing so.

Penalties

The LAD provides for compensatory damages, punitive damages, payment of the employee’s attorneys fees and litigation expenses if the employer is found liable. The Equal Pay Act increases these damages by granting an award of double the total of wrongful pay disparity going back to when the disparity began or the beginning of the limitation period, whichever is longer.

What Employers Can Do

Employers must look at pay rates throughout their entire organization at all locations. They should analyze the pay to ensure that there are no disparate rates of pay. They should also document the reasons why each employee receives the pay rate she does – document, document, document.

Contact Us

Our employment attorneys counsel employers to help them ensure they are complying with their legal requirements under the Law Against Discrimination and the Equal Pay Act. We also represent employers in disputes with their current and former employees, including negotiations, litigation, arbitration and mediation. Call us at (973) 890-0004 or email us to schedule a consultation.